TY - JOUR
AU - Goulder,Lawrence H.
TI - Tax Policy, Housing Prices, and Housing Investment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 2814
PY - 1989
Y2 - 1989
DO - 10.3386/w2814
UR - http://www.nber.org/papers/w2814
L1 - http://www.nber.org/papers/w2814.pdf
N1 - Author contact info:
Lawrence H. Goulder
Department of Economics
Landau Economics Building 328
Stanford University
Stanford, CA 94305
Tel: 650/723-3706
Fax: 650/725-5702
E-Mail: goulder@stanford.edu
M2 - featured in NBER digest on 1989-04-01
AB - This paper employs a general equilibrium model to assess the effects of major components of the Tax Reform Act of 1986 on the performance of housing and other industries. The model considers both short-term and long-term effects on housing demands, house values, and investment in housing. Model results indicate that in the short run, the recent cuts incorporate tax rates, elimination of investment tax credits, and scaling back of depreciation deductions together have negative implications for investment in non-residential capital but positive effects on housing investment. This mainly reflects the fact that prior to the '86 tax reforms, investment tax credits and favorable depreciation rules disproportionately benefited non-housing industries; thus their removal especially affects industries other than housing and helps ?crowd in housing investment. Over the long term, however, the tax changes imply lower investment in housing as well as in other types of capital. The reduced housing investment stems from adverse effects of the reforms on aggregate output and real income.
ER -